Rejection of a client's claim against their bank for loss of speculative investments

Facts

[F.] , an Israeli optician, maintained a banking relationship with bank [Y.] in Zurich from 1985 to 1993, during which his initial deposit of US$ 70,000 grew to US$ 1,150,000 through successive contributions and gains from investments. In 1993, [F.] transferred his assets to [X.] S.A., where he deposited a cheque for US$ 1,214,000. During this period at [X.] , [F.] primarily carried out leveraged foreign exchange transactions, initially generating large gains but then significant losses. In 1996, [F.] brought an action before the Court of First Instance of Geneva for payment of US$ 1,047,982, alleging that [X.] had executed its management mandate in a defective manner. The Court of First Instance and the Court of Justice of the Canton of Geneva dismissed the claim. [F.] then appealed to the Federal Tribunal.

Considerations

The Federal Tribunal dismissed the appeal to the extent that it was admissible. It considered that the parties had not concluded a management mandate and that the client, [F.] , had himself given the necessary instructions to the bank for the foreign exchange transactions, with full knowledge. Although the bank had committed faults by not sufficiently informing the client about the increased risks arising from the use of leverage, these faults…